Charlotte Street Partners



To be free is to be lost

Written by Alex Massie
4 June 2020

2020 was supposed to be a year of transition, not calamity. It was the Year of Getting Brexit Done. Now it is the Year of Covid, the consequences of which will be with us for years to come. The coming recession seems likely to eclipse the 2008 financial crisis in scale, scope and global impact. If the lights are not going out all across the world, we may at least say they are flickering. This is a sub-optimal moment for a project of national reinvention. 

Yet Brexit is happening, for the people have demanded it must. If no deal can be struck with the EU then so be it and the impression is gathering that the UK government increasingly views any deal as a bad one. Henceforth we shall, as the government likes to put it, be an “independent nation” once again. This has significant consequences for the United Kingdom’s place in the world.  

Previously, the UK considered itself a bridge between the United States and Europe. It was in the European Union but not, as this strategic posture indicated, quite of it. Britain’s role was to explain Europe to the Americans and the United States to the continent. In truth this position was coated in a patina of self-flattery, assuming that each side of the Atlantic alliance needed some kind of interpreter to speak to the other. The United Kingdom, according to this sensibility – for it was a feeling or worldview more clearly than it was a codified set of strategic maxims – would be the indispensable nation, linking the old and new worlds together.

Viewed from one perspective, then, Brexit is less a retreat from Europe than an upgrading of the UK’s aspirations. This country was never fully committed to the European project; now it is time to cut loose and make our way in a much-changed world in which the future is many things but most unlikely to be European. Just as Barack Obama announced a “pivot to Asia” as a core component of the United States’ foreign policy posture, so the UK will look to fresh markets for growth.

“Global Britain” was a challenging prospectus in 2019 that seems all the more perilous now. The pro-Brexit argument asserts that risk is energising. The road to what Boris Johnson once called the “sunlit uplands” of a post-Brexit nirvana may be challenging but the journey, as a matter of national esteem, will be worth it. In a world of big battalions, a medium-sized power such as the United Kingdom will make a virtue of being overmatched; nimbleness is all.

To which it might be objected this is a Panglossian appraisal of an unavoidable reality. The UK is a small player when matched against the EU, the US, and China. As we cannot change that, we must instead assume we are perfectly-sized for the challenges ahead.

Henceforth, the UK must organise its statecraft around three competing relationships: with the EU, the United States and with China (and, more broadly, Asia). Trade-offs are no more avoidable than the dilemmas imposed by these competing interests. 

Trade talks with the US have begun, but only the most credulous can believe this will be a quick and win-win proposition. Domestic pressures – on tech, on agriculture, and much else – compete with the political requirement to strike almost any kind of deal, the better to illustrate the new liberties enjoyed by post-Brexit Britain. (In passing, note the enthusiasm for a US-UK agreement and contrast it with the government’s indifference to a UK-EU one.)

To take but one example, the British public is firmly of the view that large internet-based companies should pay more tax in this country. The US administration objects to London’s proposed two per cent digital sales tax which would, it argues, unfairly and disproportionately target American tech giants such as Google, Facebook, and Amazon. Washington warns that proceeding with the tax will invite retaliatory US tariffs on British goods. One side will have to give and it is not obvious the Americans have more to lose.

Nor should the forthcoming American presidential election be seen as a liberating moment. To the extent he has a guiding philosophy at all, Donald Trump is a “Me First” president, but it would be a mistake to assume his replacement by Joe Biden would solve that problem. The next US Congress is unlikely to be a free-trading one, not least since the latest Congressional Budget Office forecasts suggest the American economy will take a decade to recover from the economic calamity caused by the Year of the Virus. It estimates that Covid will cost the United States almost $8 trillion dollars by the end of this decade.

In such circumstances, even more than usual, no American presidency will be interested in cutting the Brits a generous deal. Indeed, one consequence of the Covid crisis is a gathering appreciation of a changing world; the last 30 years have seen global incomes soar and much of that owed something to the west’s victory in the Cold War. Global order, upon which some of the conditions for growth depend, requires both a hegemon and an acceptance of common assumptions. Exports amounted to about 10% of global GDP in the 1970s; now they are equivalent to 25%.

That era may now be drawing to a premature close. The World Trade Organisation notes that the dollar value of world merchandise exports fell by three per cent in 2019, slowed by a combination of trade tensions and sluggish growth. This was not quite offset by an increase in service exports. This year, the WTO forecasts a slump of at least 13% in global trade and more pessimistic estimates suggest trade in goods might fall by almost a third. In other words, the public health emergency is the least damaging aspect of this crisis.

But consider the long term too. China’s economy will in dollar terms eclipse the US’s at some point in the next 15 years. This does not seem likely, at present, to be an American century. That will have profound political and economic and security implications.

The growing scepticism at Westminster over the decision to permit Huawei to build and operate some parts of Britain’s 5G network offers a taste of this. That decision was made in the belief that without Huawei’s involvement, Britain’s communications infrastructure would suffer. But it also put the UK into a vice, squeezed by China on one side and the United States on the other.

The coronavirus has exacerbated that squeeze, as has China’s decision to speed-up the elimination of Hong Kong’s limited autonomy. The Basic Law, which enshrined the principle of “One Country, Two Systems” until 2047, is steadily being undermined. That in turn forces a choice upon the United Kingdom in which the advantages of pursuing an independent foreign policy must be weighed against the country’s longer-term economic interests.

Independence – in this instance offering as many as three million Hong Kong citizens the right to live and work in the UK – comes at the price of antagonising China. That may be worth it, not least on grounds of national self-esteem, and by way of making up for the UK’s failure to offer Hongkongers an alternative before the 1997 handover. But the risk cannot be ignored either, just as it is difficult to wholly banish the thought this grand gesture, and all its accompanying talk of “historic” and “moral” obligation, is a nod to the last flickering of an imperial past that has in other respects all but disappeared. It is a statement of openness certainly, but also one carrying a whiff of nostalgia.

In some circles, it has become fashionable to portray our most pressing political divisions as a struggle between “citizens of anywhere” and those of “somewhere”. Broadly speaking this pits globalisation’s “winners” – the affluent, often metropolitan, classes – against its “losers”, typically the blue-collar working and lower-middle classes. Tellingly this western-centric analysis overlooks the startling gains made by millions of the world’s poorest citizens. But, like all sweeping theories, it contains some truth. The backlash against “elites” evident across the western world does rest on a suspicion that some places, and some whole sections of society, have been left behind. 

But it is a diagnosis that carries particular problems for the United Kingdom. Brexit was won by the Citizens of Somewhere but it was also sold as a national liberation allowing the UK to be a “country of anywhere”. Freed from our European entanglements, the UK would henceforth be free to sail the world’s oceans. Trade deals would be struck here, there, and everywhere. Britain would be buoyant once again.

Alas, the world is more complicated than that. If there are opportunities, there are also great dangers. The UK has left the relative safety – and boredom – of the EU to set a fresh and independent course. It is its misfortune, perhaps, that it has done so at a moment in which the risks of this new enterprise are perhaps more evident than the opportunities. If globalisation is, however temporarily, in retreat, is a medium-sized country that thirsts to be everywhere really anywhere at all?

About Beyond the Street and Alex Massie

We are all guilty of being too inwardly focused sometimes, especially as we navigate these changed times. It is all too easy to be caught up in the problems close to home, and for overarching trends to pass us by.

To remedy that short-sightedness, Charlotte Street Partners has enlisted the ingenuity and talent of the writer and commentator Alex Massie. As our new correspondent at large, Alex will look at the bigger picture. We have challenged him to come up with something a bit different: broad, lateral thinking, thematic insights and a more global perspective.

Alex is a freelance journalist and commentator based in Edinburgh. Not only is he Scotland editor of The Spectator, but he also writes a political column for The Times and The Sunday Times. He features regularly on the BBC as a political commentator and has written in the past for The Telegraph, Politico, The Washington Post, the Los Angeles Times, The New York Times, the New Statesman, The Observer, and TIME magazine, among others. He was also the Washington correspondent for The Scotsman and assistant editor of Scotland on Sunday. 

We hope you enjoy his work – and do feel free to forward this email on to colleagues and friends you think might be interested. They can subscribe to Beyond the Street and our other regular briefings here

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